District of New Jersey Stays Pay-For-Delay Cases Pending High Court’s Decision in K-Dur

Defendants in reverse-payment actions pending in the Third Circuit (New Jersey, Pennsylvania, and Delaware) take note: in In re Effexor XR Antitrust Litigation the Honorable Joel A. Pisano, U.S.D.J., of the District of New Jersey has stayed several class-action litigations challenging the legality of certain reverse-payment settlement agreements between Wyeth and generic drug manufacturer Teva Pharmaceuticals, pursuant to which Wyeth allegedly paid Teva to delay its marketing of a generic counterpart to Wyeth’s Effexor XR drug.

Judge Pisano issued the stay in light of the pending petition for certiorari with respect to the Third Circuit’s decision in In re K-Dur Antitrust Litigation, which created a circuit split by holding that reverse-payment settlement agreements constitute “prima facie evidence of an unreasonable restraint of trade” in violation of federal antitrust laws, even if the settlement agreement does not exceed the scope of the patent in suit. Other circuits, in contrast, have upheld such reverse-payment agreements when the agreement corresponds to the scope of the patent. We previously reported here and here on the circuit split and the pending petitions for certiorari on this issue.

Judge Pisano’s stay is to continue until the K-Dur proceedings in the Supreme Court have been concluded. Thus, if the Supreme Court hears K-Dur on the merits, the length of the stay could be significant.

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